Video: The EU Banking Crisis Contagion is Spreading

Americas Biggest Threat is EU Sovereign Debt Crisis not AQAP

Okay, let’s get this straight. The injudicious assertions promulgated by political charlatans on both side of the aisle from Obama to Congressman Pete King that America’s biggest threat is Al-Qaeda in the Arabian Peninsula (AQAP) is feculent and even dangerous. In fact it is one of the more laughable jactitations proffered in recent years and ranks up there with the suggestion that America is post racial or even that Wall Street and bankers can police themselves.
In all honesty as things stand, our truest and greatest threat is the European sovereign debt crisis and not AQAP. For if the chickens come home to roost, with the chickens in this sense being the massive preponderance of complex financial papers and derivatives which remain without a true valuation and inundate the global markets, and then we have seen nothing yet in terms of an economic disaster. I means, what is on the horizon given what is occurring in Europe will eventually demonstrate that what we just observed with regards to JP Morgan-Chase and Jamie Dimon will be just a drop in the bucket.

But instead of giving these events the attention they require and other signals, we ignore them and continue with the small thinking myopia that would advance a HR 1838 (SWAP Bailout prevention act) on behalf of Republicans or an HR 3784 (Gas Price Spike Act of 2012) on behalf of democrats. The later under whom oil companies would be taxed at 50 to 100 percent of profits considered to be “higher than reasonable.” Notwithstanding other distractions whether they concern Mayor Cory Booker’s honest remarks on private equity or the President’s personal opinion on Gay marriage, we never seem to be able to be proactive and address real issues that will impact us more than any of the aforementioned in aggregate. Fact is gay marriage has nothing to do with the US economy.

Bush, followed by the Obama administration implemented massive stimulus that were supposed to grow the economy. Unfortunately, such has not manifested as promised by the Keynesian heavy Obama administration (Bernanke, Krugman and Geithner). By their logic the stimulus was supposed to produce fifty cents of GDP growth for each stimulus dollar spent. But instead of increasing demand, what they did was discourage consumption and investment by the private sector who based on all this talk, rightly expect tax hikes to finance the stimulus somewhere in the near future. Meaning that the stimulus actually squashed the private sector spending it desired to stimulate.

This may be why the CBO recently reported the strong chance of another US recession soon. They predict that the US Gross National Product (GNP) will go negative for at least two quarters, given the eventually ending of the Bush-era tax cuts, the extended unemployment benefits and the reinstating of the payroll tax rates back up to 6.2 percent from the current 4.2 percent. Not to mention that currently as a nation, we spend $454 billion a year just on servicing the interest on the national debt alone. Then there is the $642 billion spent on the Afghan war (this includes this year’s spending). And let us not forget the 11 million homeowners in the US with in excess of $800 billion in negative home equity and you can see we have a big mess on our hands without the problems in Europe.

Starting with the UK, Britain's economy contracted by 0.3% in the first three months of the year, faster than previously thought and pushing the country back into another recession and equal to the contraction in the final quarter of 2011. There has been no growth in manufacturing after last year the sector exhibited a decline of 0.7% at the end of last year. The banking sector also contracted, by 0.3%.

Then there is Spain. Spanish banks’ total loan losses could range between 218 billion and 260 billion Euros, more than currently expected according to estimates by the Institute of International Finance. Spain’s economy is in critical condition with 23 percent unemployment of which 50% percent of those under 24 are unemployed (the highest in the Euro zone) and they are in their second recession in three years. Spain like all the European countries that, are uncompetitive, have high debt levels, and suffer from low savings rates that have been forced down in over the past years - one reason why 16 Spanish banks were downgraded last week.

The picture is no different in Italy which saw Moody‘s Investors Service downgraded 26 Italian banks, where investors are needing higher risk premiums for Italian government bonds on fears that Greece may exit from the euro zone and Italy's double-dip recession . Italy is estimated to have around a debt burden of €1.9 trillion (about 120% the size of its gross domestic product), or about $2.6 trillion).

The reality is all the talking and meeting the G-8 just did wasn’t anything and empty, especially without Russia, China and India in attendance. The realty remains that a Greek euro exit is very likely and soon. If it happens, it will lead to runs on Spanish and Italian banks, resulting in the need for the ECB to give out more credit to keep the banks from collapsing. Although the problem isn’t Greece, but rather that Greek banks are undercapitalized. Greece cannot crash the euro zone alone. But what it may lead to can. If they are allowed to leave, the same will be true for other nations.

Ben Bernanke and the politicians in Washington DC speak of recovery while the facts do not support their contention. Not to forget that it was in the 1970s when Nixon enabled bankers and politicians to print and spend at liberty without a gold standard and a Central Bank owned by Wall Street, has resulted in a country where the cost of things we need to live have risen at twice the rate of our income. The truth is that real inflation has been running 5% higher than government is telling us in spite of what is being told to us by Paul Krugman (that there are very few Americans living on a fixed income being impacted by Bernanke’s zero interest rate policy). Maybe this is why Krugman is so bent on another $4 trillion of debt and a debt to GDP ratio of 130% to get our economy back on track.

Yes we cannot see the big picture. The real US deficit is over $5 trillion. Our policy appears to ignore Greece, which after several years of austerity are in the midst of a full-blown economic depression and they still do not have a balanced budget. The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent, is already experiencing a depression that will only get worse. If or when they leave, investor confidence in the euro zone will be damaged forever. Already as a nation America has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

Europe is our largest trading partner, especially as it pertains to exports. Yet our efforts are all over the place. Paul Ryan supposed spending cuts really only slow spending to 3 percent annually while Obama increases spending 4.5 percent a year in his budget. No to mention that like the EU zone banks who are undercapitalized and heavily burden with the uncertainty of how much banks actually hold in bad assets, and the potential need for the government to bail them out at the expense of a bigger debt burden, the same is true for US banks.

Economic growth is stalled both in Europe and in America plus there seems to be a lack of concern here and little if any coordination between the EU and US. None of the nations including the US are recalibrating either fiscal or monetary policy which is a must. Reform not stimulus is the answer if we look at the real world examples here and abroad. Both the ECB and Federal Reserve seem to focus on the nations and not the banks and the Obama administration has only tackled the issue from a short term perspective. So what there is a newly revealed Al Qaeda video that calls on followers to launch cyber attacks on Western targets that has Sens. Susan Collins and Joe Lieberman, chairman of the Senate Homeland Security Committee, scared, it aint got nothing on what’s going on across the pond and is nowhere as big a threat to America as the European sovereign debt crisis. Take note you heard it here first.

Washington’s New European Concern

I am blessed, first to have the family that I do and the fact that I am probably one of the only men in Atlanta who does not have cable and who has never seen basketball house wives or whatever it is called. Meaning I have more time to read and think about issues that are often avoided in American mainstream media on either side of the isle.

Over the past few years, in particularly with the election of President Barack Obama and the growing European sovereign debt crisis, I have noticed some uneasy and troubling signings in world politics. I think the war on terror brought all to the surface and things have only continued to grow tenser.

For me it started in Finland, with the rise of the True Finns, the right-wing Populist Party who last April, won 19 percent of the vote in Finland. Also there was what happened in Austria when the far-right Freedom Party (FPO), was able to obtain 29 percent of the votes giving their leader; Heinz-Christian Strache (who has been campaigning for months to kick Greece out of the euro zone) is the second-strongest party in Austria and a hard-line neo-Nazi party that desires to legalize Nazi symbols and supports the open belief of scientific racism. Both are considered far right extremists whom politics focus on xenophobic and anti-Islam positions common to the right wing politics across Europe including the British Nationalist Party (BNP).

There are still other nations of concern. In Hungary, the Jobbik won nearly 17 percent of the 2010 vote, and is one of two leading opposition parties along with Fidesz, who won an overwhelming Parliamentary majority last year. The conservative Fidesz party of Prime Minister Viktor Orban has passed laws restricting civil rights and basic freedoms that go against the country's EU membership. In Denmark, the Danish People's Party is the nation's third largest political organization, and has pushed Denmark to adopt some of Europe's strictest immigration laws. The British National Party has a policy that restricts membership to 'indigenous British people'.

As, Europe falls back into depression, the rise of authoritarianism, fascism, and the hard right wing will continue to grow and become a thorn in the side of US political concerns, in particular how we deal with the impact of these changes to our economy in a global market place. The economy of Europe is in dire straits with little if any growth occurring and extremely high rates of unemployment.

Now the wave is continuing across Europe in two of the hardest hit by the recent sovereign debt crisis – Greece and France. In Greece, the Independents (right-wing) and the far-right Greek neo-Nazi Golden Dawn party will hold more than 50 seats in Parliament. This will be the first time in fifty years that the Golden Dawn party will enter parliament. Its leader, Nikolaos Michaloliakos and the party campaigned hard against illegal immigration, and its supporters wear black shirts, and its emblems resemble Nazi insignia. Both Greek party’s reject its bailout commitments and write off its debt.

In Greece, the party with the most seats is given the first opportunity to build a coalition government. It continues down the line based on number of members in party until each party is able to accomplish this. If it is not accomplished, the inability to secure a political majority to meet the terms of the second Greek bailout would likely result in a Greek exit from the EU and more financial trouble across the globe. This means that Greece has to approve more than 11 billion Euros in additional budget cuts by the end of June in order to receive the next round of bailout money. Seeing this is the sixth year of the nation’s economic contraction and no one wants to hear the word austerity we may as well expect them to be gone by all accounts.

Add to this the election of Socialist Francois Hollande in France. Like Greece who suggests that the election results are a referendum against German austerity policies, France election seems to show the same thing. However, the German government on Monday ruled out reworking the European Union’s fiscal pact despite request for such by French president-elect Francois Hollande. Hollande also states that he wants the very rich to pay 75 percent in income taxes and “plans to hike taxes on companies that distribute profits to shareholders instead of investing in their business.” Although he campaigned on being strong on anti-immigration, he has gone on record saying that he would give residency to illegal immigrants on a case-by-case basis. Hollande will be France’s first socialist president since 1995. His proposed policies as a consequence could have major implications for all of Europe.

If history is any indication political turmoil will only grow. Germany’s obsession with austerity and hard money if we recall, is one factor that resulted in the conditions that gave rise to Hitler. We have seen what extremes can occur in the case of Anders Behring Breivik – the self-proclaimed ‘counter-jihadist’. Breivik’s conservatism focused on a xenophobic hatred of Islam and of those groups, notably political parties like the Labor and Socialist Left parties that supported immigration and asylum laws increasing the European Islamic presence.

Washington has a serious problem. Tax increases I concert with sever austerity programs I Europe have brought the far right to the front in politics. Obama needs to take heed giving that he is taking the advice of Robert Reich and Paul Krugman, who both favor a large tax increase for the United States. Obama supports their endorsed a 70 percent top marginal tax rate but doing nothing to prevent the $494 billion tax increase set to occur automatically on January 1, 2013, when the Bush-era tax rates expire under current law. Europe’s difficulties are diametric opposition to the response of Washington. The recently proposed Obama budget will send the United States more deeply into debt.

Washington needs to pay attention and stop ignoring the seriousness and likely impact of what is happening in European fascist political rise on the US economy. For the reality is that a default by Greece or any other country in the 16-nation Eurozone would be potentially deadly not only for Europe, but America as well.

The Kim Kardashian syndrome: Why Black Pay More Attention to Things That Don't Impact Them

If you go on twitter, it is not hard to see what the average African American considers as being important and worthy of incessant attention. For that matter, you can also conclude why our community is in the state of disarray it is. Our main problem is not being able to prioritize in concert with not engaging our attention to matters and issues that proffer a tangible importance to our collective well-being.

Ask the average black person about Greece, they may something about the debt crisis, but for certain than can speak astutely on its salads and yogurt more than the former. Comparatively speaking, ask them about anything related to Ms. Kim and some self-absorbed rapper, they can speak with the prowess of a Neil Bohr on particle physics. This is what I find problematic: occupation with mundane idiocy that has nothing to do with our lives than those issues that do.We question why African American youth perform poorly academically in schools, or why we don’t attend or graduate from college, yet we never examine our own practices and behaviors that contribute to this. For the way I see it, it would be more reasonable to attend to the high unemployment and dropout rates in our community than what one Kardashian does.

This is not funny. Now I know folks say I am piling up on my folk, but really I am not. It reminds me of the student I may have in my class who is failing who ask for extra credit at the last moment just to pass, when they did not attend class regularly, did not do their homework and didn’t take notes when they did attend.This is equally comparable to our inattention to the Greek and European sovereign debt crisis.

For the record, the European sovereign debt crisis has more of an impact on our daily lives and is way more import than any Kardashian or Jay-Z and Kanye West Concert will ever have. Sadly I want to believe people know this, but more sadly is the possibility that they do and still don’t care to inform themselves on the topic as much as they do the Kardashian or the concert.

To put is plainly. Countries like Greek and Ireland and Spain and Italy have borrowed lots of money from other European nations and now they cannot pay it back. America in turn does business, a lot of business with Europe so it will hit us making us suffer just as bad also. Why because the global market is based on the massive buying, selling and trading of bonds and complex papers that bundle risk that folks buy in hopes of making a profit.

As it stands, short term Greek Bonds are still trading at 50% or less of face value. With the new Plan announced last Thursday the Bonds should be trading close to, or at par but they won’t since the Greek Prime Minister just announced that he will place acceptance of the Eurozone bailout up for a popular vote. A vote many Greek citizens equal to blackmail.

If they refuse, it means Greece and Germany will not agree to the conditions of the new Plan and that Greece won’t get an 8 billion-euro payment in mid-November that would most likely run out during January that would leave the government with no funds to function. This is not a good look for American citizens. And seeing that more than 60 percent of Greek citizens do not desire a bailout, and that G20 leaders are trying to get China to drop some loot to help folk out if all goes to ####.

Greek Prime Minister Papandreou, whose PASOK party has pushed sweeping austerity measures through parliament while protesters rally in the streets, has asked for major budget cuts. Now Italy Bonds are trading at the largest spread between Germany bonds in history because of the exposure contained by the major banks of Europe. Shares in France's Society General tumbled 17 percent and Credit Agricole was down almost 12.5 percent.

We can see the impact right here just by looking at MF Global Holdings Ltd. Like other major US banks, the folks who run these massive pension and hedge funds have provided most of the wealth of banks via negative rates of interest that guarantee their liabilities, and that in effect bailed them out unconditionally with our invested money. This means as Greece goes so do all of the other debtor nations, like the US. The more we ignore the importance of these events in Europe, our large indebted and over leveraged economy accomplished by our propensity for investing in financial instrument widely used by speculators to discredit government bonds, and undermine the country's weakening creditworthiness like credit default swap (CDS)., the more danger we are in.

The end result may be a freeze in the credit markets, similar to what we saw after the collapse of Lehman Brothers. Consequently, it will also result in a net-negative impact on the job creation reducing the ability of U.S. manufacturers to sell their goods in Europe. This will give European manufacturers a significant pricing advantage over US manufactures because of the decline in the exchange rate. Thus a weaker European economy means reduce demand for U.S. exports, because with no disposable income, European consumers will not be able to buy autos, appliances and other goods.

So the significance of the Greek sovereign debt crisis has a large impact on the average American citizen.Yet still, it seems that what happens to Kim Kardashian is more important to most African Americans than the aforementioned. I do not know why but I would like to call this the Kim Kardashian syndrome – the reason why black folk attend and care more about things that do not impact them than things that do.

2 Scoops Please: When a double dip recession is a depression

Congress and most politicians are not in the real world. They do not cut their grass, go to PTA meetings at public schools or wash dishes. Rather, they have lifelong guaranteed pensions and health insurance, there children attend private schools and to top it off they take a five week vacation and Obama celebrates his birthday by raising millions of dollars for 2012. These folks are not like us, but I have said this before as well as that there is no difference between democrats and republicans. I mean more than 40 percent of senators are millionaires with democrats comprising four of the top five and more than 230 members of congress are millionaires.

I hate to say it (not really but I warned folks three years ago that we were in a depression, that the fat lady had not started to sing and the vultures were circling. All was based on the premise that our solutions from a federal standpoint are topical and isolated, ignoring that we are not in a closed economy as we believe, but rather a global economy. Keynesian approaches cannot work as they did in the times of FDR for we are no longer on a gold standard and because spending is moot since most dollars will go to foreign debt holders who will spend the money abroad and not here to create jobs in the US.

First no matter what we do or don’t do via political dysfunction cannot the escape from the fact Europe is financially crisis from the run on banks in Greece or the observation that Italy from September 2011 will be broke to the fact that the risk related to both Spain is and Italian government bonds is unsustainable and unbailoutable (if such is a word). This is essential to understanding the US economic crisis because 25 percent of our exports go to Europe and a large corpus of our business operates out of Europe. Making money in Europe has sustained us but it may be over because nations with bond yields above 6 percent in two days market terms (Italy and Spain) will eventually destroy the European economy. Not to mention none of our debates, even the recent debt ceiling debacle do not deal with this or address what is at issue – long term economic growth.

The danger zone confronting Europe is hitting America. Pundits fear the ubiquitous double dip recession but the truth is that we are passed such and already in a depression. Our structural weaknesses accumulated during the boom years are still not being addresses. The U.S. is headed not just for double dip recession but rather a full-blown depression. Obama, following the bush inept plan to grow the economy only temporarily interrupted by a bunch of stimulus which ultimately weakened the economy further (2 million more unemployed since it started).

So to understand this, go to your local ice cream parlor, if you can afford it, and order two scoops of ice cream, and see how long it take for both to merge into one. Yes a double dip recession does equal a full blown depression.

Obama, Congress, Black Folk, the Debt Ceiling and Treasury Certificates

Let me preface this first by saying I am no economist, but I was blessed in the 10^th grade to learn economy from my teacher Dr. Moyer. He was my home room teacher also. Now I attempt to read anywhere from 20 to 30 newspapers around the world to stay somewhat informed on what is going on around me. The reason for so many is due to the fact I trust no single source and have a penchant to form my own conclusion. Although these include top shelf African American outlets including but not limited to Theroot.com, thegriot.com, and even one I write for, Rollinout, they seem to , if at all, write topically about the current debt and deficit debates in a sensational form that lacks a fundamental understanding of economics regardless if Keynesian or Austrian in orientation.

The last I read, the 14^th amendment made it unconstitutional for the United States to default on its debt. Not to mention a statutory limit was put in place in 1917 when congress passed the second liberty Bond act. But one would not pick this mention up from reading most papers. Nor would objectivism ablaqueate factual distinctions often left out in an effort to cover the story.

Sure they mention Moody’s and Standard and Poor’s dropping the nation’s credit rating, yet do not provide any historical perspective. The way I see it, a market evaluation on this issue would have seen the rating on US Treasury Certificates (short term bills issued by the Treasury that are issued at regular intervals with various maturities). Should have happened at least six years ago, especially as we see now how bond ratings before the crash three years ago were not very helpful. I mean as a nation we have been basically insolvent for a long time.

Right now as it stands, democrats and republicans are an embarrassment to folk like me, bread and butter and salt and pepper on eggs in the morning Americans. China is already in the process of downgrading the US' sovereign credit rating regardless of what the Congress does. This because no matter what is done, the fundamental problem is the US' inability to generate wealth and borrowing more is not a solution. Plainly stated, we have no loot or at least limited resources left for economic development. And for our largest debt holders, China, raising the debt limit is good for investors, but bad for China,

Now for the typical American, in particular black folks, we don’t seem to have any interest on the issue other than we just want Obama to win and that the republicans are the bad guys. Other than that we don’t know what this all about, or how it affect us or may in the future, or what the Treasury note has to do with this.

It would help if we knew what a Treasury note or Bill or certificate or bond was, but for most of us – it has nothing to do with them, just as what is going on in Greece, Italy, or Spain. Sad thing is that our publications don’t seem to care or even know how to present or write about the issues in a manner that would motivate people to learn or understand they are definitely affected by all this.

Right now, American big banks like Citigroup and Bank of America are down about 7and it is even worse for banks across the pond. BNP Paribas, Barclays, and Banco Santander are all down 13% or more and Société Générale is down 16%. Just last week the downgrade of Portuguese sovereign debt and renewed concerns that Greece will need about $100 billion by year’s end to remain solvent. Which means Italy could take a hit which will expose all the big US banks due to their over extension via toxic mortgage debts, the value of which continues to fall as the housing market continues to sink. Add to this the fact that many of these American finical house have made massive profits by selling insurance derivatives known as credit default swaps to banks in Europe, we should be able to see the problem: for this is the same activity that dropped AIG to its knees in 2008.

Now all I am saying is that these talks and hardheadness on the side of both Obama and the Congress only hit us little folk. Most of them are millionaires and won’t suffer. We can be certain of fuel, water, and food shortages for no particular amount of time as well as Oil Exporters increasing their cost in an effort to deal with the losses resulting in reduced values of US Treasury Bonds. Not to mention that the value of your dollar will fall even lower and won’t be able to buy as much and that the housing market will take an even bigger hit.

All I am trying to say I guess t is ok to be oblivious and think that what goes on in Italy or anything to do with how politicians attempt to deal with this problem doesn’t impact you. But it does, whether we know it or not.

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Blackmail Economics

I have never been partial to the phrase blackmail, when historically, it seems like white oligarchs are the ones mainly undertaking such actions and folk the color black aint have no part in defining. But that is another story, and for lack of something new to assist in the accretion of incident promoting a general comity of understanding, blackmail will have to suffice.

Now *I must admit, over the past four years I was troubled by the economic landscape prior to the abyss instituted via the Bush administration, and likewise, suspect of the assertions made by the Obama administration to solve these issues. Even worse is what I see on the side of the GOP that seems to purport that verbose vehemence objecting to any action by any party is what America needs to grow jobs.

My main consternation is that the GOP offers no solutions to solving the problems of the economy or creating jobs and that Obama obviously has no real comprehension of economics. Not that I do, but my layman understanding seems to be advanced placement compared to the house GOP and the present administration. Also is the observation that in order to prove a point, even if it is to get Obama out of the Whitehouse, it seems they will do anything – even black mail. I mean no matter how you look at it saying they will not raise the debt ceiling without spending cuts is extortion.

As the debt ceiling fight continues, Republicans are playing down the effect a default could have on our national economy. Rep. Ron Paul (R-TX), when asked about what would happen if we pass the August 2nd deadline without raising the debt ceiling noted that it could be a “positive thing” because it would show we’re “serious.”

Yes it is serious out here Mr. Paul. This while recent housing and employment data notes we are struggling and may even is close to a double dip recession. Albeit under employed folk like me see the dips melted together for it still feels the same. Not to mention I suspect home prices have much further to fall. The President is not out of the clear either. Just this week he indicated that the US would provide US financial support to bail out Greece. This after he has tripled the US deficit and we have 9.1 percent unemployment.

After a meeting with German Chancellor Angela Merkel, The president said, “I’m confident that Germany’s leadership, along with other key actors in Europe, will help us arrive at a path for Greece to return to growth, for this debt to become more manageable,” Obama said.

“But it’s going to require some patience and some time. And we have pledged to cooperate fully in working through these issues, both on a bilateral basis but also through international and financial institutions like the IMF.”

I find it hard to believe that the Democrats or Republicans, regardless in the House or Pennsylvania Avenue do not see that they are holding the American citizenry hostage. Things are not getting any better for most of us and it will only get worse. Three years ago I wrote an essay describing these times called “Real n the Field.” It is that time.

Just this past Memorial Day weekend, across the nation looked like places in the Middle East. There were reports of serious violence in Miami, New York, Chicago, Charlotte, Myrtle Beach, Nashville and even Boston. In Washington recently a teenager shot her Dad with a hunting bow when he took her cell phone. Approximately, 45.1 percent 4 of all unemployed Americans have been out of work for at least six months. That is a higher percentage than at any point during the Great Depression.

Not to mention that the average price of a gallon of gasoline in the United States was is a little under $4.00 compared to $1.88 in 2009 and the cost of food and energy have risen at an annualized rate of 17 percent over the past six months. According to the World Bank, the global price of food has risen 36% over the past 12 months. And this doesn’t include the problems with floods, natural disasters, droughts, food shortages or our actions abroad. Yea, we are being black mailed by politicians on both side of the aisle and the only thing that makes them different from us is that they are inside the beltway with a direct flight to Wall Street.

There is a hole in the economy

It gets me as to how folks can propound on the esoteric meaning of nothing in the world of economics. Especially here in America, were we hear how to solve problems with solutions that do neither have method nor definition. All reminds me of an Island song I would hear harry Belafonte sing when I was a child growing up, “There's a hole in the bucket dear Liza, dear Liza.” If ever was there a need of a song to be remixed, it should be this one and the word bucket should be replaced with economy.

What is their not to see? It seems that politicians, albeit not very good in math as most Americans, want to make this a complex issue and act as if the solutions are massive and difficult – for lack of a better phrase, as if we are talking about Calculus or differential equations. Unfortunately it is not that complex and really a function of basic, simple, remedial math – adding, subtracting, multiplying and dividing.

The simple truth is that the way we are going economically is unsustainable. We are borrowing as a nation more than one-third of what we spend. I mean, let me put it another way. We as a nation, the United States, are spending $3 for every $2 we are bringing in the form of GDP.

It is also infelicitous that our political leaders know this and don’t or won’t tell us or worse, they do not know or understand the rusticism of the situation at hand themselves. For if they did they would do something and stop pointing fingers at each other. If they do not, you can best believe that the global capital markets will do it for us and like at the G20, we will not be in a position to do anything about it. We see what has happened in London, with students marching against the conservative political leadership, or last year in Greece with protesters in the streets or even this year in France. Don’t sleep it can happen here also.

But what is more troubling and scary to me is that if the Government, regardless of political affiliation does not see on the horizon what I fear, and that is a collapse in the bond market. I mean if the US is a company, with a massive debt problem plus $12 trillion and counting, with all these nations like China holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities, and the feds drop $600 billion into circulation, the value of the dollar may drop.

If this happens then it would not surprise me if foreign governments no longer want long-term US debt and will dump all the bonds on the markets if interest rates rise from current lows. This is not as farfetched as one may think given what has just occurred in Ireland and soon maybe in Portugal.

Politicians, there is a hole in the bucket. We have a sovereign debt crisis and all yawl do is point fingers at each other. We see that neither the Bush Tax Cuts, nor Obama’s massive spending have not worked. Regardless, something needs to be done now before it is too late, and it must entail at looking at entire projects and not bits and pieces. For inaction, may take our jobless rate up like Greece while they are trying to tackle their deficit. Maybe we could learn something from the difficulty they face now trying to restore fiscal soundness to their economic policy – naw, that would be too simple, instead we pass the buck, a borrowed buck at that,.

The World Economic Collapse explained in 3 minutes